Indian Railways to Raise Fares 14% to Narrow $4.5 Billion Loss

May 16 (Bloomberg) -- Indian Railways said it will raise
passenger fares by 14 percent, as the oldest network in Asia
seeks to narrow a loss exceeding $4.5 billion that stems from
below-cost prices.

Freight rates will rise by 6.5 percent, including a fuel
price-related charge, the state-run rail company said today in
an e-mailed statement. The new charges will take effect May 20.
The company decided to link passenger and freight tariffs with
fuel prices for the first time in February 2013.

Fare increases are a politically sensitive issue in Asia’s
third-largest economy, where creaky infrastructure and lack of
alternatives mean many poor people commute by train. About 13
million people ride Indian Railways each day. The company has a
workforce of 1.54 million people, according to its website.

The announcement of the higher fares came on the same day
as the Narendra Modi-led Bharatiya Janata Party had the biggest
victory in 30 years in an Indian national election.

The world’s third-largest rail network is working to curb
losses as it seeks an investment of 14 trillion rupees ($238.2
billion) by 2020 to upgrade and expand facilities. The nation
has a track network of about 65,000 kilometers (40,000 miles),
while China plans to expand its network to 120,000 kilometers
from 91,000 kilometers in the five years ending 2015.

Indian Railways, which plans to spend 452.6 billion rupees
in the fiscal year ending in March, 2015, won’t change
reservation fees, it said.